What is an “estate”?

Estate planners like to use the term”estate” frequently, assuming that everyone knows what that term means. “Estate planning,” “trust estate,” “distributing your estate,” and “estate taxes” are terms often used. What do these terms mean?

In simple terms, everything you own is your “estate”. It includes all real property, personal property, bank accounts, stocks, bonds, pension and IRA accounts, retirement plans, and life insurance. Sometimes assets overlooked are mineral rights, timeshares, deeds of trust, assignments, or notes receivable. It includes community property, separate property, or property held in joint tenancy with someone else. It includes all businesses, whether sole proprietorships, partnerships, or joint ventures. Personal property includes the furnishings in your home, artwork, tools, musical instruments, collections, guns, gold, RVs and other vehicles.

With that description, it is easier to understand other terms that have the word “estate” in them:

“Estate planning” involves the planning for the management of your estate during your lifetime and the plan for distribution after you die. It is not simply the writing of a will or a trust. It involves planning for periods of incapacity also, whether temporary or permanent.

Your “trust estate” is everything you transfer into the name of your trust. You probably will have assets that are part of your “estate” in the sense that they are an asset you own but will not be part of your “trust estate” because they are not in your living trust. Examples are IRAs, retirement, or life insurance which are definitely part of your “estate” but since they usually have specific beneficiaries, they are not part of your “trust estate.”

Distribution of your “estate” is the gathering and valuing all of a decedent’s assets, however held, and distributing them to the decedent’s beneficiaries or heirs. Thus if you had a trust but also had life insurance, your trustee would see that the trust assets go to the beneficiaries you named in your trust and that the life insurance proceeds were distributed to the beneficiaries you named in your life insurance beneficiary designation.

“Estate taxes” are the federal taxes that have to be paid after death if your estate is over the exemption amount, which is $3.5 million in 2009. If your “estate” (including everything you own, not just your trust assets) is over that amount, “estate taxes ” have to be paid.

The experienced “estate planning” lawyers at Law Office of Scott C. Soady, A Professional Corporation can advise your about the types of “estate plans” that are available to distribute your “estate” and answer any questions you may have about whether your “estate” will be subject to “estate taxes.” Call us if we can help.

Attorney AdvertisingTo ensure compliance with IRS regulations, we inform you that any tax advice contained in this communication is not intended to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing, or recommending to another party any transaction or matter discussed herein. Additionally, some postings may be back dated and no reliance can be placed on the state of the law still being the same.